The announcements in Union Budget 2017-18 provided the much necessary push to housing affordability. Host of incentives to propel demand, streamline direct tax related issues, and promoting low-cost housing in both urban and rural regions were announced which were in-line with our expectations.

Among the most important announcement was granting of infrastructure status to affordable housing development – a long pending demand of the sector. It has been complemented by increasing allocation to rural housing programme by more than 50 per cent.

By granting Infrastructure status to affordable housing, the Government acknowledges that affordable housing industry is an important driver of the economy. Affordable housing developers will now be eligible for several Government incentives, subsidies, tax benefits and most importantly institutional funding. The status could also mean that the Government may release land specifically for affordable housing development in central locations of major urban centers in India.

The budget provided limited incentives on personal income tax side for income of upto INR 50 lakh. Introduction of surcharge of 10 per cent on income above INR 50 lakh is expected to reduce disposable income further. Further, the budget was also silent on incentives to boost REITs, rental housing and commercial real estate asset.

FM has reduced the holding period for land and building from 3 years to 2 years for long-term capital gains purpose. This would help improve invest ability in properties in comparison to shares and stocks where the period is 1 year.